Brokers using LOIs to gate-keep early

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by a searcher from London Business School
in Boston, MA, USA

1yr ago

Brokers using LOIs to gate-keep early

I've been finding many of the brokers I'm dealing with are only offering single-page teasers post NDA. After requesting more information, I'm given a boilerplate response along the lines of: "Our process requires submission of an LOI before distributing further information."

Is anybody else finding this? Is this a new approach for brokers to weed out tire-kicking Searchers?

One mentor of mine said just to issue a relatively vague yet professional LOI with the expectations of re-trading. I'd be more comfortable doing this with an IOI, but it seems like submitting IOIs doesn't satisfy the brokers. I'm hesitant to spend time on deals that I'd expect to re-trade, but is this part of the process in 2025?

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reply by a searcher 1yr ago
from University of Maryland (System) in Washington, DC, USA

We are seeing a similar playbook. We follow up with an email along the lines "there is a lack of substantial financial transparency and clarity regarding the deal terms in the information provided...." and request what we want. If the response is anything other than.." please find attached.." we pass on the deal. Wasted time!

reply by a searcher 1yr ago
from Grenoble Ecole de Management in Vancouver, BC, Canada

I agree with most others - pass and move along. At least in my market, I've found re-trading difficult to the point of being a deal killer for the seller. There is a big difference between good and poor brokers, and the good ones understand the amount of information required to secure credible bids.